Cryptocurrency boredom bites graphics card manufacturers

Industry sources have stated that sales of graphics cards have been falling 40 per cent during April as demand for hardware from cryptocurrency miners has drastically dropped.

The anonymous industry sources, speaking to Digitimes, said that graphics processing units (GPUs) manufacturers based in Taipei, Taiwan - including Gigabyte Technology, MSI and TUL - are expecting sales to fall 40 per cent this month.

GPUs, which can very rapidly and efficiently manipulate memory, are vital components in gaming computers, allowing for high-quality images to be generated during play. Until recently, gamers made up the vast majority of the market for graphics cards.

As interest in cryptocurrency and cryptocurrency mining erupted in 2017, demand for GPUs grew amid cryptocurrency miners, who use huge quantities of computational power to solve cryptographic problems and verify cryptocurrency transactions in exchange for rewards in the form of newly issued digital currency. This has led to growing demand and dramatic price inflation, with Nvidia calling for manufacturers to limit the number of GPUs each customer can buy in order to ensure that gamers can still access the hardware.

Gigabyte sold 4.5m graphics cards during 2017 (up from one million in 2016) and doubled their profits as a result, while MSI and TUL also enjoyed similar returns over the past year.

According to the Taiwanese sources, however, distributors and customers running major mining operations are now cutting their orders and requested that shipments are suspended, as interest in large-scale cryptocurrency mining has dropped off and values of Bitcoin and Ethereum – two of the largest cryptocurrencies – have nosedived.

Some ‘mining farm’ operators could be putting the purchase of GPUs on hold in anticipation of Bitman’s $800 (£573) Ethereum mining machine – the Antminer E3 – which is due for release at the end of July this year and which does not require graphics cards to run. This week, Ethereum’s developers announced a proposal which would reduce the mining reward for the cryptocurrency by 80 per cent in order to discourage excessive energy consumption, centralisation of mining efforts and issues with access to hardware.

Although the sources have said that manufacturers are hoping that interest in cryptocurrency will rebound in the coming months, this drop in shipments could lead to GPU manufacturers having to slash their prices in order to shift their supplies of the pricy hardware.